Standardization and Innovation in Corporate Contracting (Or "The Economics of Boilerplate")

Kahan, Marcel; Klausner, Michael

doi:10.2307/1073747

Cited by 157 publications

(83 citation statements)

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“…Korobkin 1998 reports experimental evidence showing that default rules exert a pull on contracting parties, which he attributes to status quo bias. 24 For analysis of boilerplate generally, see Kahan and Klausner 1997;see also Hill 2013. 25 As an example of a deal-specific term, consider the purchase price specified in the Stock Purchase Agreement among Freeport-McMoRan Copper & Gold Inc., Phelps Dodge Corporation, and other sellers, and General Cable.…”

Section: A Constrained Variation In Boilerplatementioning

confidence: 99%

M & A contracts: purposes, types, regulation, and patterns of practice

Coates¹

2016

Research Handbook on Mergers and Acquisitions

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Section: A Constrained Variation In Boilerplatementioning

confidence: 99%

M & A contracts: purposes, types, regulation, and patterns of practice

Coates¹

2016

Research Handbook on Mergers and Acquisitions

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“…Klausner (1995) argues that network effects arising from the presence of so many firms incorporated in Delaware may prevent a state from competing with Delaware even if that state offers better law. The learning benefits associated with the repeated use of Delaware provisions (Kahan and Klausner, 1997) could have similar anti-competitive effects. Our study suggests yet another reason why another state may have difficulty competing with Delaware.…”

Section: Puts Itmentioning

confidence: 99%

“…Relatedly, Kahan and Klausner (1997) argue that contractual terms (in loan agreements, charters, etc.) may persist not because of their quality but simply because of the "learning benefits" (such as drafting efficiencies and a reduction in uncertainty) that arise from these terms having already been widely used.…”

Section: Introductionmentioning

confidence: 99%

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Delaware Law as Lingua Franca: Theory and Evidence

Broughman

Fried

Ibrahim

2014

The Journal of Law and Economics

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Why would a firm incorporate in Delaware rather than in its home state? Prior explanations have focused on the inherent features of Delaware corporate law, as well as the positive network externalities created by so many other firms domiciling in Delaware. We offer an additional explanation: a firm may choose Delaware simply because its law is nationally known and thus can serve as a "lingua franca" for in-state and out-of-state investors. Analyzing the incorporation decisions of 1,850 VC-backed startups, we find evidence consistent with this lingua-franca explanation. Indeed, the lingua-franca effect appears to be more important than other factors that have been shown to influence corporate domicile, such as corporate-law flexibility and the quality of a state's judiciary. Our study contributes to the literature on the market for corporate charters by providing evidence that Delaware's continued dominance is in part due to investors' familiarity with its corporate law. JEL Classifications: K22, G24, G34

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“…This finding of ''clustered change" is consistent with network effects in contracting. Interestingly, the boilerplate literature also contemplates the role of lawyers and underwriters as change agents for contracting standards (particularly Kahan and Klausner, 1997;Choi et al, 2013).…”

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confidence: 99%

Market standards in financial contracting: The Euro’s effect on debt securities

Engert

Hornuf

2018

Journal of International Money and Finance

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a b s t r a c tThe introduction of the Euro ushered in a rise to dominance of English contract law in European debt securities. Corporate issuers in the Euro zone chose English law significantly more often than a control group from other European countries. The Euro effect on choice of law is particularly strong for debt securities in local markets that, arguably, were most affected by the Euro. The Euro effect is not explained by differences in the suitability of English law compared to other laws, a change in issuer composition or debt securities types, and the greater market share of British and American underwriters. We argue that increased standardization benefits (network effects) from a boost in cross-border investment provide the best account of why English law conquered the European debt securities market.

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Standardization and Innovation in Corporate Contracting (Or "The Economics of Boilerplate")

Cited by 157 publications

References 0 publications

M & A contracts: purposes, types, regulation, and patterns of practice

M & A contracts: purposes, types, regulation, and patterns of practice

Delaware Law as Lingua Franca: Theory and Evidence

Market standards in financial contracting: The Euro’s effect on debt securities

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